Crude Oil Prices May Struggle if EIA Report Hints at US Output Gains

Talking Points:

  • Crude oil prices may struggle despite risk-on trade dynamics on EIA report
  • Gold prices may edge down as yields rise but US Dollar weakness supportive
  • What are the forces driving long-term crude oil price trends? Find out here

A swell in risk appetite has proven supportive for crude oil prices. Futures tracking the FTSE 100 and S&P 500 equity benchmarks are pointing higher before London and New York come online, hinting the path of least resistance continues to favor the upside.

The monthly EIA Drilling Productivity Report may cap progress however if it suggests US producers are boosting output. Rig count data from Baker Hughes showed the number of operational extraction points hit a four-month high last week, extending a rebuild of capacity started in early November.

Meanwhile, gold prices might turn downward as the chipper mood weighs on bonds and pushes yields upward, undermining the appeal of non-interest-bearing assets. Continued US Dollar weakness might limit losses for the standby anti-fiat alternative however.

What do retail traders’ bets suggest about gold price trends? Find out here!

GOLD TECHNICAL ANALYSISGold prices put in a Shooting Star candlestick below resistance at 1342.49, the 38.2% Fibonacci expansion, hinting a move lower may be ahead. Negative RSI divergence bolsters the case for a downside scenario. A move back below the 23.6% Fib at 1329.45 exposes the January 10 low at 1308.38. Alternatively, a push above 1342.49 targets 1353.03 (trend line from July 2016, 50% expansion).

Crude Oil Prices May Struggle if EIA Report Hints at US Output Gains

Chart created using TradingView

CRUDE OIL TECHNICAL ANALYSISCrude oil prices breached the 50%Fibonacci expansionat 64.32, seemingly clearing the way for a challenge of the 61.8% levelat 66.33. The 76.4% Fib at 68.81 beckons beyond that. Alternatively, a turn back below 64.32 – now recast as support – paves the way for a retest of the 38.2%expansion at 62.31.

Crude Oil Prices May Struggle if EIA Report Hints at US Output Gains

Chart created using TradingView

— Written by Ilya Spivak, Currency Strategist for DailyFX.com

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